President Biden answers questions from reporters on the South Lawn of the White House

Larry Summers says Americans will have to lose jobs to reduce inflation

The U.S. unemployment rate must rise before Americans see relief from inflation, economist and former Treasury Secretary Larry Summers said Monday.

US inflation is around 8.6% year-on-year, its highest level in 40 years, and shows no signs of slowing down. Summers argues that the United States must maintain an unemployment rate above 5% for five years if inflation is to come down.

“We need five years of unemployment above 5% to contain inflation – in other words, we need two years of unemployment at 7.5% or five years of unemployment at 6% or one year of 10% unemployment,” Summers said in a speech in London, according to Bloomberg.

“Some numbers are remarkably disheartening from the Fed Reserve’s perspective,” he added.

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The US unemployment rate is currently at 3.6%.

President Biden answers questions from reporters on the South Lawn of the White House

First lady Jill Biden listens to President Joe Biden speak to reporters before boarding Marine One on the South Lawn of the White House, Friday, June 17, 2022, in Washington. (AP Photo/Evan Vucci/AP Newsroom)

Summers’ statement came hours after President Joe Biden claimed a recession was not “inevitable”. He said he came to this conclusion after a conversation with Summers.

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Biden made the statement during a testy exchange with reporters while vacationing in Delaware over the weekend.

“Economists say a recession is more likely than ever,” a reporter can be heard telling Biden on a beach.

“Now you sound like a Republican politician, just kidding, that was a joke, that was a joke,” Biden said. “But joking aside, no, I don’t think that’s the case. I was talking to Larry Summers this morning, there’s nothing inevitable about a recession.”

During a Sunday appearance on NBC, Summers himself predicted that a recession was likely. Several high-profile CEOs have also begun preparing for a recession.

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“My best guess is that a recession is coming. I’m basing that on the fact that we haven’t had a situation like this with inflation above 4% and unemployment above 4% without a recession follows in the next year or two. And so I think it’s likely that in order to do what’s necessary to stop inflation, the Fed will raise interest rates enough to cause the economy to sink into a recession,” Summers said over the weekend.

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